Morning Commentary: Emerging markets debt mostly steady; selling hits Indonesia rupiah

By Rebecca Melvin

New York, Sept. 5 – Emerging markets debt steadied somewhat early Wednesday with some currencies still trending lower and the Republic of Indonesia’s rupiah in investors’ crosshairs, dragging the country’s sovereign bonds lower as well.

The Indonesia rupiah dropped following on the heels of a slump in the South Africa rand on Monday and Tuesday and renewed selling in the Argentine peso that started last week. The Turkish lira was a little bit stronger however.

Indonesia’s government responded to the selling with measures intended to help bolster the rupiah, including selling dollars and buying government bonds as well as postponing several power plant construction projects that hadn’t yet secured financing, and new import taxes.

Overall, emerging markets debt was more stable following moves lower on Tuesday when South Africa sovereign and corporate bonds weakened.

In the Middle East, the Gulf Cooperation Council countries are still prepping deals, including Al Hilal Bank, which is holding fixed-income investor meetings for a planned dollar-denominated sukuk.

Also, final terms emerged on China General Nuclear Power Corp.’s €500 million green notes that priced with a 2% coupon at 99.696 for a yield of 2.047%, or mid-swaps plus 150 basis points.

Pricing for the 2025 notes came at the tight end of revised guidance for a yield spread of mid-swaps plus 150 bps to 155 bps, with initial talk set at mid-swaps plus 155 bps.

Orders for the senior unsecured green notes topped €850 million.

Bank of China, BNP Paribas, Credit Agricole CIB and ICBC are joint global coordinators, lead managers and bookrunners of the Regulation S notes.

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